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Food Chains (Recruiting Ecology III)
(February 9, 2007) So, to keep the analogy in front of you, the
Recruiting Industry is like a playing field with Candidates on one end and
hiring managers on the other. In North America alone, 50 Million candidates
traverse the distance of the field successfully. On one side, you have 8 Million
employers. On the other side, there are 150 Million workers. With that level of
volume and complexity, there are many, many alternative paths and a huge number
of non-redundant supply chains.
it's possible (and usually pretty smart) for a candidate to try to navigate into
direct contact with the hiring manager, the tactic is generally seen as
entrepreneurial and challenging. From the lowest levels of the economy
(landscaping and other residential home services) to the highest, jobs are
routinely acquired by candidates with the savvy to build their own connections.
A bit of moxie, some good sense
about where the market is and what it needs and the willingness to risk failure
in person are all that's required.
For the bulk of candidates and Hiring Mangers,
however, the process includes a series of brokers and middlemen. The tasks range
from communicating the availability of a job, communicating one's availability
to take a job, verifying and checking the veracity of the facts, tracking and
scheduling the details, brokering resources for less than long term
relationships, managing strategic chemistry, fixing empty holes quickly,
building a flow of jobs or candidates. Hiring managers are pretty likely to take
a passive role right up to the moment that the decision really gets moving. It's
really a wonderful luxury to have other people in charge of finding the
potential workers, reviewing their credentials and scheduling their interviews.
Technology is changing the realities of this
approach. (See the new Jobster hiring
manager to candidate videos.) There is also a generational dynamic at work. The
communications of the under 30 crowd are more likely to include text and IM.
These tools imply a direct connection with the hiring manager.
the thing that makes the web go round, is fast at work on the Recruiting playing
field. To the extent that the people in the middle are intermediaries, they are
in a race against time.
economics, disintermediation is the removal of
intermediaries in a
supply chain: "cutting out the middleman". Instead of
going through traditional distribution channels, which had
some type of intermediate (such as a
wholesaler, broker, or
agent), companies may now deal with every customer
directly, for example via the Internet. One important factor
is a drop in the cost of servicing customers directly.
Disintermediation initiated by
consumers is often the result of high
market transparency, in that buyers are aware of supply
prices direct from the manufacturer. Buyers bypass the
middlemen (wholesalers and retailers) in order to buy
directly from the manufacturer and thereby pay less. Buyers
can alternatively elect to purchase from wholesalers. Often,
B2C intermediary functions as the bridge between buyer
and manufacturer. (Wikipedia)
The first important distinction among the
various food chain players (vendors) is whether they are primarily oriented to
serve the hiring manager or the candidate. This is, of course, a matter of
degree. Since almost of of the money that flows through the playing field comes
from Hiring Managers, it is hard to have a really viable candidate centric
business. This dynamic, that most money flows from Hiring Managers, really adds
deep confusion to the evolution of the industry.
Although candidates are the central value in the
Recruiting equation, they do not usually generate direct revenue for the
middlemen on the playing field. We routinely hear 3rd party Recruiters wondering
why they should ever work for a candidate (They rarely say thank-you.).
Recruiting management systems often serve to shield companies from candidates.
The flow of funds from Hiring Managers to the playing field causes a distortion
in perception that may be outmoded. Various demographic trends are rapidly
redefining the value of a candidate.
With that caveat in mind, the second big
distinction is whether a given player primarily helps communicate jobs to
candidates or helps communicate candidates to those in Hiring positions. At the
extremes, the difference here is between contract staffing firms and job boards.
While the various media (40,000 job boards and doubling every three years)
that communicate to candidates are a large and growing segment, the staffing
industry, which peddles candidates to hiring managers, dwarfs it by an
order of magnitude.
In theory, this sounds confusing and
contradictory. The vast majority of Recruiting endeavors are paid for by hiring
managers who are essentially buying data (or various levels of refinement in
sourcing). A fractional percentage (3% or 4% or the workforce) work for
temporary or contract staffing firms. The revenue in these firms is huge. They
sell candidate time to employers at significant markups. It's a small corner of
the industry with massive financial impact.
We'll let this sit and stew for a day. Next in
the cue .... the various subspecies on the playing field.
John Sumser © TwoColorHat. All Rights Reserved.
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